I'm not saying that this is anything close to optimal, but it should be noted that under this system (which is reminiscent of the way ancient Chinese criminal law worked, per Legal Systems Very Different from Ours[0]) people who get beat up should still report and take the punishment. Sure, you'll get punished for it once but you'll also build a solid reputation for not letting things slide, so it's highly unlikely that anyone will want to beat you up again.
[0] Except that the punishment back then for being involved in a crime (generally a theft or a swindle of some sort) was, guess what-- you got beat up.
That is, unfortunately, not how this works. The only ways to stop bullying are to be able to stand up to the bullies, which usually is not a realistic proposition (you wouldn't get bullied in the first place if you could) and can lead to further escalation (right on up to shootings or stabbings); to have a very, very empathic teacher who will put their foot down; or to have solid anti-bullying programs which use effective, proven methods to stamp out bullying.
Mind that nothing will deter a really determined bully, and getting punished because your victim spoke up instead of accepting the bully's power will escalate things from 'bullying just because you are available' to 'bullying because I now want you, and specifically, you, as miserable as you can be, all the time'.
Of course, if you're young and you have no friends, good luck getting your peers to think you're worth defending.
The one time I got attacked, one of the top three popular guys in the class went berserk on my attacker. This happened in grade school and the next aborted attempt at bullying wasn't until the end of middle school by someone who had transferred in later on.
This is a terrible idea that was obviously flown as a butt-covering excuse by administrators who, like the school administrators, have discovered that it is much easier to fight reporting of crime than it is to fight crime.
I am deeply disappointed to see it treated as some sort of deep truth, when in fact it is a shallow lie that anyone with the slightest understanding of bureaucracy ought to have seen through in no time at all.
He was only scared that I'd hit him back, and nothing else.
I hope life has been kinder to you following this. :(
I definitely don't condone all that as a way to get stronger, but at least I got something from it. Silver linings and all.
But when it came to bullies, the school was just as you described. Worse, the punishment for being in a fight was the same whether you started it or you were just beaten up. If you made the fight get noticed, you got punished. It was quite clear that they had no interest in stopping the fights, just in making sure they didn't get reported.
And on the bus, the driver didn't like my family because she once turned the bus around on our grass, tearing up a bunch of it, and my father was angry about that. In retaliation, she let bullies beat me up on the bus for years and turned a blind eye.
My education would probably have suffered if I was home schooled because both my parents were forced to work to make enough money to survive. And I'd be even more introverted than I am now.
But man, the bullying was bad.